US Stock Markets Face Inflation Data Amid Tariff Uncertainty

In the coming week, U.S. stock investors bracing for inflation data will face renewed uncertainty over tariffs and government bond yields. The S&P 500 index, which closed at an all-time high despite a rocky start to September, underscores the challenges investors encounter amid historically high stock valuations.

Economic releases, including the forthcoming consumer price index and producer prices, are keenly watched for clues regarding interest rate cuts and the impact of tariffs on pricing. Federal Reserve Chair Jerome Powell's recent remarks about rising employment risks have reinforced expectations of rate cuts at the central bank's September meeting.

Meanwhile, Fed Funds futures indicate a significant expectation for interest rate reductions, with a 90% chance of at least a quarter-point cut. Investors continue to grapple with uncertainties over trade policy following a U.S. court ruling against many of President Donald Trump's tariffs, all amidst elevated stock valuations that continue to rise.